Beijer Ref AB (publ)

Hi everyone, Christopher and Joel here. Welcome to Q1 2025 report. So we'll get straight into some of our slides and then we'll finish off as usual with a Q&A. So summarizing Q1, from our point of view, good quarter across the globe. And part of the heading of course, those are very, very good EPS growth and we'll come back to that. But a total sales growth of 16%, while the organic growth was 4% and pretty stable or good across the globe. US will come back to that and then may and APAC. We continue to have good growth from acquisition, which of course is part of the business model, which we will continue going forward with. So all in all, we would say a stable good first quarter, especially with some uncertain times here, I would say it shows the model continues to be very good even in these times. And then on the EBTA, a growth of 13% with stable margins compared to last year. We'll come back a little bit more on the different regions, but 9.4%, so happy with the margin development in Q1. Also cashflow positive. Of course, the people who knows BayerF in details, usually Q1 and Q2 is an inventory and accounts receives a build up and then we usually flush through cashflow in Q3 and Q4. So I would say still a good and stable cashflow for being Q1, so happy with that as well. And then an EPS growth of 20%, which is very happy about on there. And then as you know, we closed the Cofew acquisition beginning of the year, the leading HVAC distributor in Hungary. So all in all, in the total, good growth, good margins and especially good profit growth in the quarter. Okay, moving on to the different segments. Coming back to the word good and stable in all segments of positive growth in their HVAC 6% growth, which is also across the globe, I would say. Stable in the commercial refrigeration plus 2%, which is a decent level in that product category. And then OEM 3%, which is a little bit lower than what we usually have in that segment. So I'm sure I'll get a question or two, but we'll have the same answer. We see the order book coming up very good here. So we expect that growth to accelerate as we go through the year. So should be nice growth there as we move into the next couple of quarters. Okay, moving on to EMEA. Growth of 14% driven by the HVAC, of course, related to the acquisition we've done over the last 12 months on GIA Group and Co4U. Other than that, continues to be a stable market with good growth in Eastern Europe. Africa has been developing very well for the first time in a couple of years. That's nice. And then stable market in the Nordics and Central Europe and continue to be weaker in Southern Europe, especially France. And also worth mentioning, of course, when you talk about EMEA and North America, it is pre-season time, especially in the HVAC segments. Of course, it's more bigger quarters ahead as we move into Q2 and Q3. The OEM segment we talked about, but we see that ramping up fairly nicely. And I know I've been talking the last couple of quarters about good quoting levels. We see the orders now building in the backlog. So should be improving as we go through the year. And then if you look at the different margins, stable margins in the region at a good level for being Q1. So all in all, I mean, we'll come back to that another stable quarter with solid margins in EMEA. And we look forward to moving into the high season here as things starts heating up for Bayrefs. Then moving over to APAC. APAC continues to do very well, both on sales and the margin evolution. I think you've seen it now for some quarters. So we are in a good position. For sure in APAC and good markets, in especially Australia. And taking market share for sure in this region and we've been doing for quite some time and also driving the margin in there. So we did have in March a cyclone that did limit sales for three to four days. We'll expect to pick that up, not in Q2, but over the rest of the year as things needs to get prepared. So we're very happy with the development in there. And we also, maybe worth mentioning on this slide, we did a small acquisition related to securing some more quotas for a refrigerants going forward. So very strategic for us, no major impact on the business, but puts us in a good position to continue to drive the market share evolution in especially Australia. Then we'll go on to the US. Solid 6% organic growth and a very good plus 31% growth together with especially our acquisitions, their young supply. Solid margins if you adjust for the dilution. Of course, a lot of things happening in the US and I'm sure we'll come back to that on question on tariff supply chain, et cetera. But we continue to do well in our segments. As you know, our US business is mainly built on aftermarket service replacement. And we see that market continue to be stable. And of course, the US is the same that Q1 is a smaller quarter as we move into Q2 and Q3 and waiting for the first heat wave to hit Alabama, Tennessee or Georgia. So all in all, I would say a very solid quarter again from the US platform. So if you look at the growth per quarter here over the last couple of years, of course continue to be very good. And we can also see now we had organic growth for the last four quarters. So we're happy about that in today's market. I would say it's not a booming market, but I think we continue to do well and also shows how the business model works in a little bit more uncertain times in the aftermarket and service replacements. So we look forward to see the trajectory here going forward, but very happy with this slide, of course. And same moving on to the margin. I mean, it's a stable margin under our Q4 and Q1 are smallest quarters. Of course, we expect that to pick up, but all in all, in all regions, stable good in the US, stable in Maine, and we'll continue to make progress in the APAC region under. So happy about the margin evolution in Q1. It is where it should be in today's market. And then wrapping up my part of the presentation, I believe with a, we're just summarizing 16% growth, stable 4%, nice EB day drop through, of course, and then an EPS growth of 20%. So all in all, I would say a very good quarter from Bayref.

All right, good morning, everyone. As usual, dive straight into the EBIT of 778 million in the quarter, which is up 14% compared to last year. Financial net in the quarter amounted to 131 million, same level as in Q4 and 10 million below Q1 last year on the back of lower rates, despite higher net debt levels. So the way it's been now, base rates are approximately one and a half percent lower compared to a year ago. On the tax side, we report 165 million in the quarter, which is 25% in line with last year. All in all, resulting in a net profit of 482 million compared to 408 last year. And if you move over them to our EPS, we report 0.94 crowns, which is 20% up compared to last year, which we think is a very nice number in combination of good growth and stable margins and good development on our financial expenses. On the cash flow side, we continue to deliver a solid operational cash flow of 450 million approximately, despite the seasonal buildup of 340 million in net working capital, which is in line with our expectations. And as Christopher mentioned here, in the beginning, I still like to point out that Q1 is the quarter that we are building up inventory for Q1. And we are building up inventory for the high season as well as gradually building AR as we went going into this high season. On the next slide here, you see that we have now delivered positive cash flow for seven consecutive quarters. And we are happy about the level in Q1. And this is where we should be now when we have a more stabilized supply situation compared to in Q22 and Q23. Finally, shortly on leverage, our leverage ratio measured as net debt to EBITDA, excluding leasing and pension was sequentially stable at 1.8, which is 0.2 above last year. And net debt is 1.6 billion higher than a year ago and related to the acquisitions that we have closed over the last 12 months.

All right, to wrap it up, thanks Joel. To wrap things up, you heard most of it already, good quarter in interesting times, with stable organic growth, nice acquisition growth, good margins, stable cash flow in there. So I think we're very happy about the execution in all our regions during the quarter and of course the last years as well. Long term, no major changes for us, continue to be nice tailwinds, of course here in the maya with regulation, also in we see that also in Australia, moving into New Zealand, in the US, you're starting the transition into a new refrigerants day 12 or 454B solutions that will come more and more during the year. We continue to develop the US platform, opening branches, have another one coming online here in May, launching the private label heroes in the US April, May. So all in all, we continue to focus on driving the value creation for the long term or Bay ref and it's working well. So with that, and May worth mention also on the acquisition side, I'm sure we'll talk about in the Q and A, continue to have a good pipeline there. For 2025 and beyond. So with that, we're finished and open it up for Q and A.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Gustaf Schwerin from Handelsbanken, please go ahead.

Yeah, morning to questions. First, we heard about some pretty big price increases effective April from one USOM yesterday. They said acceptance was quite good as well, which I guess is with the final customer there given the distribution model. I mean, is this what you're seeing from all the OEMs right now and if that is the case, I assume you have followed. To add to that actually, I mean, can you comment anything on what kind of response you have seen among your customers over the past month then? That's the first one.

Yeah, so I guess you're alluding to that comment in the US market specifically. And we see the same. Yeah, so we don't see any difference in the US. We saw most of price increases from not only OEM, but also across the board from small and mid-size suppliers in the US coming through here in Q1 and we're passing it on as we move into Q2. It's from everyone, right? So there's no, it's getting passed through. Don't have any other comments. We can see it started to come through here in April and we'll continue in May and June as we go through the cycle. So nothing strange and also remembering in the business model, well, with aftermarket service replacement, we always pass on the price increases. So in general, the general comment for us in that type of market, it's positive for us. So we expect that to come through here in Q2.

But just to be very clear here, because I mean, most of the OEMs announced price increases during Q1. From what I understand, what we heard yesterday from one of the OEMs was another two rounds of price increases early April. So I'm just wondering if all the OEMs have done multiple increases now. No, the way I

would answer it is that we talk about OEM here, we're talking about HVAC manufacturers and in my view, you have major ones or I won't get into who's who, but you have of course, KRLNX, Vane and Reem and Dyke in certain extent. And a couple of them has done two, a couple has done one and I won't get into who's who and if the other two are waiting to do their second one or not. But we're in the comment you heard because I listened into last night, we're in a similar position for BayerF, like one of our other distributors in the US.

Perfect, then just secondly, I mean, you mentioned the M&A pipeline, what's your general thinking on further acquisitions in the US in the short term? Are you putting those a bit on hold given uncertainties or is it business as usual?

No, it's probably somewhere in between, nothing is on hold. It's more of aligning together with the sellers and seeing how the market develops. So we continue and do our due diligence and alignment and probably also in a prudent way, decide when and how we sold this together in these uncertain times. But in general in the US, as you saw, it was a stable growth in Q1, right now there's nothing, the waters are not super choppy for us in the US. So it's more, and you put a caveat, you never know what happens when you wake up tomorrow, right? We have a US guy here and he checks to social every morning to see what's happening. So in general, I would say that we're more aligning on, together with companies, we're talking to what the effects are and could be and how they're positioned. But at this moment, it's a lot of things happening, but it's not very choppy for us in the US in our model. So we'll continue to focus and as it looks today, I also have a good year on acquisition side in the US as we move through 2025.

Okay, thank you. Thank you.

Thank you. The next question comes from Vivek Mehta from Citi. Please go ahead.

Thank you very much, everyone. And good morning. I have two questions if I may. The first is a follow-up really on the previous question, talking about tariffs, of course, the direct impact and you elaborated on that. And as well that you're not seeing a very choppy environment. But if we just think as we're going into the second half of 2026, I appreciate there is a lot of uncertainty here, but how are you thinking about how this could impact the growth trajectory, particularly for maybe more discretionary renovation, as well as the minority of yourself which come from new construction? Thank you.

Yeah, I think you're absolutely right. I mean, it's a lot of things and unknowns out there, but if I just start to talk to what we've seen so far, and then the rest becomes more a high level analysis or hypothesis depending on what happens the next three to six to nine months, right? So far, it's been a fairly, our suppliers mainly in the US, we talk price increases of three to 5% in the market flushing through here. That's not a revolution, supply chain continues to be very stable. We have nice products and good inventory position for the season. The activity level is still for us good and continue to be good here in April. So the factual things what's happening in our business is good in the US. Of course, there's an enormous amount of discussion on the tariff side and what's happening or not, which are going up and down. But so far, our business has not been major affected by that. And we do keep in touch all the time with our main suppliers, right? Especially on the HVAC side and have very partnership discussion how we manage this together. So on that side, so far, it's been good. If you look in the future, as you alluded to in your question, how will this affect the end demand and the consumer and et cetera. And they need to break down different components, right? 95% of our business is aftermarket service replacement, right? So we're not super active in new construction. We're not super active on the commercial side, even if that's been pretty good over the last years in the US. So for us, the main business is still replacing, servicing, fixing system that's break or old, et cetera. So let's see how that market will react to these changes or the consumer. But also in the back of our heads, remembering 70, 80% of our customer finance, what they do, it's mostly related to that type of question. I would say interest rate will have a bigger impact on this than the discussion. There's still a decent market in the US on the job side. So trying to summarize that so far, we haven't seen any effects of everything that's happening in the US on our business.

That's very helpful, thank you. My second question is again on the Paris theme, just following up on your comments you're still expecting to launch private label in the US in April and May, your production and sort of resourcing it tends to be quite regional. But my understanding is that you do sort of the private label from, all right, those are manufactured in Asia. So could you just elaborate on, is there any impact to that launch from the tariffs? Thank you.

No, because the product is already on the ground. So we're good to go. Under the bed, thank you. Thank you.

The next question comes from Carl Ragnarstam from Nordea. Please go ahead.

Good morning, it's Carl here from Nordea. It's obviously good to see that you feel comfortable around current trading in the US, you grow obviously 6% organic in the quarter. Could you give us some flavor if you see some dynamic shifts between the sort of component, replacement sales and equipment sales would be super helpful?

The short answer is no. And it's also a little bit, when you do those questions seasonality on, on you know, Q4 and Q1, where you might have some more placement repair and now you move into more equipment heavy part of the season. So I think it's, for us, there's no big changes in the mix or business running. We have, over like six months ago, have had a pretty good activity on projects and also the commercial side, but it's also because it's a small segment for us. So we're gonna grow in that segment, but from a smaller base. So in general, not any big changes in our business as we see it based on the last couple of quarters.

And if we would see more muted market at some point in the US, it would be the equipment side. I guess that is more cyclical, right? If that would be the case, do you think that it would be cross margin enhancing that we see sort of the spare parts side in shares?

Yeah, I think it's, of course, we have a higher gross margin percentage on the parts and services than if you change a fan motor or a compressor or parts. So, but in my view, it's still, that's the way the market's been over the last two years. If you look at statistics, housing sales in the US has been a 30 year low the last two, three years, right? So that continues to be on a stable low level. So right now we don't have any parameters. We're waiting for the housing market start wakening up and there'll be a nice tailwind when it does. I think what's happened now is that it's probably gonna take longer than expected because of all the turbulence in the US. But in the meantime, the business continues to tick on at a decent pace.

Okay, very clear. If you looked at the refrigerant mix in the US during Q1, could you shed some light on what portion is 410? What do you expect for Q2? And also you tend, I mean, you took the bet sort of seemingly at least on R410 holding quite substantial inventory of that. Do you think that it will lead to sort of gained market shares compared to competitors taking the A2L bet so a more of A2L bet and also on that note, how sticky if you gain market shares, do you think that they are?

Yeah, I think it's a hard question to answer and we know less of course, what our competitors have done. And I know it's a phrase question. I wouldn't use the word we took a bet on our side. We believe that's the market transitioning into the new more A2L driven solutions that you would still have a lot of interest in this year on the standard solution on there. So for us, we built up inventory support that was talking to our customers and remembering the most and most of our customers are small installers, right? As we don't do big new construction and big commercial project at the extent in the market. So for us, it was more a strategy driven by servicing our customers in the best way we can, but still be enough conservative that we don't sit with excess inventory as the year goes through. So I'm not sure if we're gonna take market share with this position, but we continue to service our customers in a good way. And I would say in Q1, probably 85, 90% of what we sold was the 410A solution and in Q2, I don't know at this day, probably of course the A2L will continue to grow into Q2 and be a bigger part for every month we move in there. And we can tell you more as we go through Q2 what the trend is. But I would more say that we sit with a very competitive solution. We're also now putting in the Sinclair solution, ducted solution based on A2Ls. So we have a nice price position on that product as well to service our customers. And we continue to expand on our branch network. So all in all, I think we're happy with our strategy at least for now.

Okay, very clear. And the final one, if I may, is on Europe, which is obviously our biggest exposure and gradually moving into the high season now. Because I guess it's a tricky market. At least in Europe, better, less good in, I guess in southern parts. From an inventory point of view, how do you think that you'll position yourself to the high season? So what is the strategy given that it is a tricky market to read, I guess currently?

So we're always positive. And our guys out in the market are always even more positive. So we're always well positioned when it comes to inventory. That heat wave can always come and then we need to be sorted out. No, but of course we treat the model the way we built up, won't get into super detailed theories that we have regional structures, right? So we have an Eastern Europe market and a regional leader for that. We have a Southern Europe, we have a Nordics, we have Central in that. So we divide the market in different components. And of course Eastern Europe has been seeing this trend for now a couple of years to build up according to the lead. You're a little bit more conservative in the Southern part because of how the market has been and et cetera. So it's treated very regional how you build it up. And usually those regions, you can exchange inventory between each other as well, depending on the market place out. So I think the model works well there. And the market continues to be okay. And the biggest weakness we had for last 12 months have been France. If you look at Southern Europe, actually Italy is okay. Spain is okay. So it's mostly France. And one day that market will turn as well and then be a nice upside for us when it does. But I think also that's a little bit the business model we have. Being in 46 countries around the world, you have ups and downs also in the US in different regions will be, but when you put them together, you get a pretty nice combination. And of course, if we get a booming market in France later on this year, it'd be a nice upside. But I'm not betting on that right now. We need to see how the season transpires.

Okay, very helpful. Thank you. Thank you.

The next question comes from Victor Trollsten from Dansky. Please go ahead.

Yes, thank you very much. Morning guys. Thank you for taking my questions. So firstly on pricing, I guess in the US, if you could help us just understand sort of the ways that we're coming from now. So how much of the 6% organic growth in the US now in Q1 was pricing? And if you could help us with any comments on the expected price impact coming in Q2, I thought you said three to 5% coming. But if you could confirm that to us.

Yeah, so Q1 was limited price effects and it usually is. If you take normal times in the US and it's not normal times now, on the HVAC side, you usually get the updated pricing in March and you execute it in April. That's more normal pricing pattern. And of course that's as the season starts moving in. You have a lot, I mean, I'm trying not to make it too long, but you have a lot of components in the US this year because you also have the A2L transition and you have the old 410A that you bought in on there. And of course there's no price increases from the OEMs on the 410A because it's not being made anymore, right? So the price increases you're getting from the OEM side is on the A2L product. So I would say in the majority, the vast majority in Q1 was volume. Not, I mean, maybe it's 1%. I don't know, but it's vast majority. And as you move through the quarter, we see price increases on most of our products flashing through in Q2 of three to 5%. But that's of course a timing effect as well, how they flash through. So it's not a huge difference. I think the component that makes it more different, but for us, it's probably gonna be more Q3, Q4 next year is also the transition into the A2Ls because those products are eight to 10% more expensive as you move into that product portfolio. So did you get all that?

Yeah, that was super helpful. I'm writing fast here, but so that's super helpful. But I guess, so we should not expect, and you mentioned this previously, but no additional impact from the A2L transition, I call it now in Q2 or Q3, Q4, that's more 2026. So I guess the clear question is the three to five, including the A2L if you want.

Yeah, because I think it's a fair assumption and also remembering our business model where 55, 60% is parts and supply and 40% is equipment. In the Q2, Q3, you get a little bit higher weight on the equipment side because you're in season, of course. So you would expect some impact in there, but for making it simple, maybe you assume 20, 25% A2L transition in Q2, it's a guess. It might be more, but that could be an assumption to work on and then you'll get, I assume 40, 50%, 60, 70 in Q3 and so on. But so there will be some impact from it for sure, probably even more in June than in April. So month by month that portfolio will take bigger and bigger place in the sales.

And I guess that comes on top of the other price hikes we are seeing, but let us work on those assumptions. But I guess if you could add any flavor on the impact on gross margins and sort of the drop through to profitability then on the price hikes, should we expect, I guess a positive impact on profitability as well, or what would you say?

I would always say just think about it as stable. No, but in general, right, the A2Ls, of course, we should have a better drop through, but the same margin, right, percentage margin, because it's more, it's not gonna be an increased percentage margin, but of course, we're gonna sell the same product 10% more expensive with the same type of things, cost base. So right now, I would just assume, I think we're in a good pattern. We assume the margin should continue to be stable so that we'll go forward and hopefully these things and if the market continues to be okay, it will help on the growth side of the business.

Okay, fair enough, and sorry for pushing you a bit, but the three to five percent price hikes on top of A2L if you want, just to mitigate tariffs, I guess that should impact margins percentage wise, or not.

I mean, it's a little bit the way I work, I believe it when I see it. And I have no concern just to make clear, whatever price increase we get is passed through. I mean, that's how the business model works and will continue to work. And remember in replacement after market service, that's how you work. It's not a project based business, it's a day to day run business. How would then the margin will evaluate, let's say when we run through Q2, and we can probably have more details on it, depending how it develops. But in general, I would say stable good margins. And remember also in the US, we continue to open branches and invest in fixed costs. So we're more in a growth pattern than a margin pattern, if I may say so.

Fully fair enough. And just finally on that topic, because I guess the poor US consumer has been through a lot in the attract market the last couple of years for sure. So just given the replacement, you know, a characteristic of your business, is there no risk of down trading? I think What's Go talked a bit about it yesterday, that you're actually saying that, you know, enough is enough to some extent for the customer. And how is your portfolio then positioned if the customer would down trade?

If they would down trade, I now have a fantastic product for you. It's called an A2L 6 Clear, fantastic quality, a nice brand and we'll stand behind it. So I'm ready. No, but it is, it gives us a very nice tool in running the business. But our assumption are still mostly related to what we see in our business and the installers and they still base on a premium brand that we carry. We don't see any of those effects. Our main strategy, you know, we have the option right now, but the main strategy with bringing in our 5D label is to go after some new construction markets, some family housing and markets that we haven't played in before, because it's more a transactional brand. And now with the product portfolio we have there, we can go after that and make decent margin. So the strategy is not to play the game or whatever you said first, but we have the option if the consumer or our customer wants to. Super, very fine. Thank you very much. Thank you.

The next question comes from Adela Dashian from Jefferies. Please go ahead.

Good morning gentlemen. A lot of good questions already asked and answered. I'm gonna actually stick on the US topic a bit here as well. I mean, we've talked about the positive contribution from price increases, but at the same time we're still seeing the offsetting effect, I guess, currently from the margin dilution from the recent acquisitions. Could you maybe help us or guide us in a good direction of what this specific constitutes? I mean, this is one percentage coin is that what we should anticipate that the effect will be even going forward or what's the, yeah, how should we think about that?

Yeah, I'll let you all answer in detail. I think you should think about it like this, that it's 1% dilution, right? And you should, as we move into April, we're back, it's gonna be apples to apples because that's when we did acquisition, I believe of Young Supply. And I would assume the stable margins going forward in the US, because of course we are reinvesting and we'll continue to reinvest quite a lot in branches and fixed business. So even if we drive improvements in the underlying margin, our ambition is, as I think I said it before, to continue good stable margins and focus on taking market share and driving growth in the US, launching Sinclair, opening branches, investing in e-commerce. So we're trying to navigate both in the US to build the platform out. And of course we'll make more acquisitions in the US as we go through this year and next year. So I think the underlying assumption is to assume the stable levels with that dilution that's been through that position so far.

Yeah, I think there is a relatively little left for me to add on that. I'm stacking. But I mean, it's exactly that, right? We, latest acquisition we did in the US was done, I would say it was in the end of April. So there is a slight effect, I would say, in Q2 from that, but then the comparison is in the numbers. So that together with the investments we are doing. And so I think the answer from Christopher was complete.

But surely launching private label is gonna result in additional investment needs that you didn't have last year, correct? I mean, so yeah, the way to reach a stable margin development then for this year is through the positive impacts from price increases.

Yeah, and then of course we always work with getting, I mean, we have in our business model, driving synergies and improvement. And it's not only that, it's pricing tools, it's on the purchasing side, it's rebate discount and models. And of course, as you down the road launch, private label that shows we're positive for the margin. But we're trying to balance those things too, as I said, having good margins in the US, continue to have those good margins and grow faster than the market in the US.

Great, and then could you please remind us of what's your US exposure or what percentage of your US exposure that is impacted by the ATL transition today? I think you previously said 20% if I'm not mistaken.

I think in Q1, it's 10 to 15% of our sales of equipment that's been ATL. And that's gonna ramp up month by month in Q2. I think we'll get back to as we run through Q2, what we're trending at. But I'm sure as you move into June, I would expect to be trending about 50% on data. I'm guessing now, but that would make sense.

Got it, all right, that's all for me, thank you.

Thank you.

The next question comes from Carl Boekvist from ABG Sundal Collier. Please go ahead.

Thank you, good morning. Question on APAC, a region where you said you had adverse weather effects affecting you and yet you still grew 7% organically. So the effects of the weather and potential branch closures, et cetera, how much do you think that had an impact on growth figures in Q1?

Yeah, so from our side, I mean, we had a closure on three to four days and in quite large part of our Australian business. When we look at it, we are, I think we saw the underlying pace in the business in the APAC region was at a similar level as in Q4. So I would say we are really, really happy with the pace in the quarter, despite of the closures in the region. So generally the gap between Q4 and Q1 in organic growth in APAC is caused by this closure period.

Understood, and then in EMEA, the margin pressure that you in Q4 highlighted from heat pumps and now in Q1, you say it will gradually have a smaller effect. If you just look year over year, the margin was only down 0.1 compared to 0.7 in Q4. So how much of an effect should we actually factor in from this heat pump dynamics in Q2 and onwards?

I don't have the mathematics exactly because it points here and points there, but I think the assumption that we have done is that it will be not visible as we run through in Q2 and Q3 because our mix completely changes, right? We were focused on the cooling side and it takes over and it's the main product that we sell. So I think the fair assumption is that we, we're mainly through this type of a flash out of the inventory in Eastern Europe and as we replenish it and move into Q4, we don't expect to have any real issues with that component.

Now, and you need to look back a little bit on the margin gap in Q4 as well. I mean, there you had an enhanced margin issue, so to speak, from the strengthening of the US dollar, which added to the dilution from the heat pump side, which reversed now in Q1 where the Euro strengthened against the dollar again. So that's why I have a smaller gap here in Q1. And as Christopher said, we don't expect the heat pumps to be any visible driver to any extent here going forward in Q2

and Q3. Understood. The final one is just in general, in these turbulent times, do you feel that you are still able to gain market share? I mean, you've clearly talked about a lot of initiatives you've taken throughout your organization over the past five years, but would be interesting to hear.

Yeah, I think it's of course on the one quarter is one quarter, but what we see and we do analysis, we have main regions where I won't get into detail where we're taking market share for sure, but it's also part of the model is moving to new segments with the private label absolutely taking market share, but that whole market is taking market share in general. So it's also moving into those trends. I think on the HVAC side, absolutely. On the OEM side, absolutely. And the refrigeration, I would say is stable. And the focus on expanding the refrigeration side is more on maybe the US and bringing into new branches and down by, but at some small levels. I would say on HVAC and OEM, you can put us up against anyone. I think we're in a very good position.

Understood. That's all from my side. Thank you.

Thank you.

The next question comes from Douglas Lindahl from DNB Markets. Please go ahead.

Morning Christopher and Joel. Thanks for squeezing in a question from my side as well. Coming back to APAC just briefly, I would call it pretty impressive margin execution here for the quarter. Is this as good as we can see the profitability in that region or are you trying to balance this more towards growth in future? How should we think about profitability for that region specifically?

Yeah, we're never happy, but you're not allowed to increase your expectations. So keep them stable. No, it's always more things to do. But of course, we said all along that we wanna get it up to the 10% plus as a region and focus on growth. But of course, with this higher organic growth, you get a nicer drop through, you get things happening when you're moving at seven, eight percent organic growth. That's also part of the success story. And you've seen a lot of good market and work on the synergies with acquisitions. We've done there with a much more better supply chain, also building up private label, et cetera. But I think it's getting, as you said, to a good level. And we also see more ducted sales and integrated solution in our mix versus just selling split system. But you're right, I think we're getting to a good level. It's not gonna stop us to drive the margin. But if we can continue having a good growth trajectory with these margins, that'd be nice development. But there's still some work to do for sure in the APAC region. And also remembering, it sounds like a parenthesis, big market for us is New Zealand. And that's been probably in a recession the last two years. So that should also pick up maybe not this year, but next year. So yeah, we feel good about the APAC region and direction it's going.

Okay, thank you. That's all for me.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

So thanks all for listening in and let's all hope we have a fantastic summer and we'll talk again in July. And if you have any more questions, feel free to reach out. So thank you very much for this hour.

Thank you.